Slowing global growth and heavy levels of corporate debt will weigh on small caps next year, according to JPMorgan Chase & Co.

Investors focused on smaller stocks would do best to buy companies with strong levels of free cash flow and solid balance sheets, with Japan and emerging markets including Brazil a better bet than the U.S., according Eduardo Lecubarri, the bank’s small- and mid-cap strategist.

He’s particularly down on banks and consumer companies that do well when the economy is booming.

“Can we see a rally next year? Sure,” Lecubarri said in an interview. “For me, it won’t be big enough or last long enough to be wanting to chase financials and cyclicals here.”

While Lecubarri has less conviction on which countries are best for investing, he says the Russell 2000’s 4.4 percent drop this year is quite small after two years of double-digit gains, and the benchmark U.S. small-cap index has more room to fall.